German Manufacturers' Confidence Up for 2012

GDP increase of 1% possible as economy rebounds.

German industry and the important machine-tool sector on Monday expressed confidence for business this year even though the European sovereign debt crisis has hit growth in recent months.

The BDI industry federation "sees an increase in gross domestic product (GDP) of around 1% this year as achievable," its president Hans-Peter Keitel told a news conference here.

"But that is based on two conditions: that there is no worsening of the crisis on the financial markets and that economic policy makers do not unload any additional new burdens onto companies," Keitel said.

Indeed, German growth could come out fractionally higher than 1%, the BDI chief said.

"A figure with a 'one' before the decimal point is feasible... even if the current economic indicators do not suggest that yet," he said.

"We're counting on a strong rebound in the second half."

Last week, Germany's six leading economic institutes upgraded marginally their forecast for GDP growth this year to 0.9%.

The government is currently penciling in growth of 0.7%, but is scheduled to release an updated forecast soon.

Machine-tool makers are key sector of industry and their VDMA federation was also cautiously optimistic.

"We expect negative growth rates in output for only a few months this year, which will be ironed out during the course of the year. We're sticking to our prognosis of zero growth for 2012," the head of the VDMA industry federation, Hannes Hesse, told a news conference.

"We're currently experiencing a cyclical weakening that started last summer, but is currently very moderate and has not, overall, continued in the last months," Hesse said.

With business confidence indicators pointing upwards, "incoming orders in the machine-tool sector will start moving upwards by mid-year at the latest," the industry chief forecast.

In the first two months of 2012, orders were down 11 percent on a year-on-year basis, Hesse said on the first day of the world's biggest industry and trade fair held in the northern German city of Hanover.

The machine-tool sector is traditionally the backbone of Germany's export-orientated economy.

Copyright Agence France-Presse, 2012

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